Agricultural strikes highlight need for new wage framework

THE CAPE Chamber of Commerce has repeatedly called for a more realistic approach to wage determination. The agricultural strikes as well as a recent Labour Court judgment in the metal industry further highlights this need.

The dilemma in the agricultural sector in the Western Cape became evident last year when the minister of agriculture realised that the sectoral determination was a Department of Labour function and could only be revisited after 12 months.

The Labour Relations Act (LRA) regulates collective bargaining without imposing any duty to bargain. A refusal to bargain or to reach agreement is treated as a dispute of “interest”, not “rights”. For that reason neither party may seek relief in any court for any protected power plays. The dispute is resolved by the use of legitimate power (strike or lock-out).

It is possible to establish what employers can afford to pay

Formal collective bargaining structures could have more disadvantages than advantages for employers – particularly small and independent farmers.

Demands of R150 per day (R16.67 per hour) as a minimum wage is a significant jump from the R7.71 per hour (around R70 per day) set by the minister of labour last year.

Giving in to such demands could have a significant impact on the sustainability of many farms. There are vastly divergent profitability and sustainability metrics which vary from farm to farm, crop to crop and also by region. Measuring the profitability of a sheep farm in the Little Karoo depends on different input factors to a wine farm in Stellenbosch.

It is vital to protect employees from unlawful and unfair exploitation, but it is more important to protect jobs on the farms and consider the ability to create employment.

The need to protect smaller independent employers against blanket sectoral determinations can be seen in the metal industry. The metal industry has been formally collectively bargaining to the disadvantage of all SMMEs and it has taken 16 years for SMMEs once again to have a voice in that forum.

Farmers must be aware of the risks of simply agreeing to “negotiate” or “bargain” with their employees. As there is no legal duty to bargain, farmers should be willing to “consult” employees, but the final decision should remain with the farmer. This will not avoid a power play, but it will speed up the process of fixing wages. Mediators can help resolve such disputes.

In terms of the LRA there is a legal duty to have regard to real data when determining an absolute minimum wage and extending it to the rest of the sector. It is similarly important to distinguish between a minimum wage and a living wage. It is understandable why employees strike for a living wage. But a minimum wage allows jobs to be created where employees can exchange their worthwhile value for a decent wage and through proper skills development be migrated up the exchange ladder to know and earn more.

Between the minimum wage and a living wage there are a number of skills levels which should be acknowledged and rewarded accordingly. A tractor driver with 10 years’ experience should earn significantly more than someone with no previous work experience. But both need to be fairly accommodated. Youths need employment and access to an environment where they can help support their families while improving themselves with better skills and working towards higher wages.

A new framework is needed where the value of all employees and their contribution to the business can be measured. This must be done in the context of the entire business operation. A strategy needs to be adopted to find the skills gaps and graduate potential skills into new positions. At the same time, employees must be appropriately rewarded for their new knowledge and concomitant contribution to the business operation as a whole.

Simply put, by looking at operations independently and using an empirical formula it is possible to establish what employers can afford to pay employees while maintaining a sustainable operation.

To grow our economy and upskill employees there needs to be a national policy focused on job creation and job retention. In addition, the government needs to use a number of other government policies like the skills and jobs funds.

To provide possible solutions the Cape Chamber would welcome further discussions with the minister of labour as well as the CCMA. The chamber is convinced that the current 400% differential between various minimum wages across various sectors highlights the current problem.It is baffling that an unskilled employee in forestry receives R6.55 per hour while a similarly unskilled employee in the public service receives R26.61 per hour.

The need for a new framework is urgent but the solution is fairly simple. By using the “value exchange” methodology South Africa can regain a stable labour environment, reduce the risks of power plays and create jobs.

Manuel is executive director of the Cape Chamber of Commerce.